While the regulators and the industry squabble over the planned reforms, analysts are more worried about whether Americans’ faith in shares [stocks] has been shattered for good. An unlucky few have seen their investments completely wiped out in the past couple of years. Almost all investors are nursing losses. But shares always do well over the long term, right? Not necessarily. Analysts at Merrill Lynch, an investment bank, have worked out that the break-even point for someone investing sensibly on a monthly basis since 1990, when America’s interest in mutual funds exploded, would be around 776 on the Standard & Poors composite index, a level to which it has come perilously close. In other words, the average investor is near to losing his capital. Fund managers are learning a bitter lesson. Just as they benefited from a virtuous cycle of inflows and stockmarket rallies on the way up, they are vulnerable to a vicious cycle on the way down.

No matter where you look in the American economy these days, there's a sinking feeling. This is the price we pay for Enronesque corporate criminality and an ill-conceived (and wildly expensive) Bush family grudge match with Iraq that sidesteps the real threats to this country — North Korea, Pakistan, Saudi Arabia, Yemen, home-grown anthrax-mailing terrorists, and so on.